While key benefits vary according to the industry, the classes of key benefits applicable across the sectors are:
1. Accurate Demand Forecasting (Different customer segments have different revenue yielding patterns. And, these patterns change. An RMS will be able to manage the forecast at the customer segment level dynamically)
2. Revenue optimization (Revenue optimization is a combination of pricing, demand, and marketing strategies used to maximize revenue growth, based on analysis of price points, sales channels, and other areas)
3. Regulatory Compliance Management
4. Promotion management (At any point, there may be many promotions that will be running concurrently. It is impossible to keep track of them manually, let alone use them as a basis to maximize the revenue. A sound revenue management system addresses this pain point)
5. Product/SKU Rationalization. (The benefits of proper SKU management include Optimizing inventory levels (right stock at the right time), and Increased revenue)
What are the business problems solved by Revenue Management Software?
Irrespective of the industry (be a professional services firm, a software company, a services company, or a retail chain), revenue management software will help you close the accounts quickly at the same time providing you a complete picture of your organization’s revenue. You will be able to understand the impact of elements such as discounting, deal duration, frequency, and product mix on the growth as well as profitability. It will also help you do better forecasting of revenue and profit.
In the businesses, with Fixed Capacity, Perishable Inventory, or Low Marginal Servicing Costs, Revenue management can add significant upside. It is also highly useful when the demand can be segmented with varying sensitivity to prices among the segments. Revenue management can help manage peaks and valleys in demand, which can be predicted with some degree of certainty.
Some of the revenue management software includes and/or integrates with contract management. Contract management or Contract Lifecycle Management is closely related and widely used business activity to Revenue Management. New ways of driving revenue mean the customer lifecycle is changing. Allocating the contracted revenues based on GAAP revenue recognition standards is undergoing massive change due to the recent GAAP mandates ASC 606 and IFRS 15 (for subscription-based businesses, and when they are permitted to recognize revenue) — making contract management, more than ever before, an essential part of a Revenue Management System.
There are software products available to address channel revenue management. Most revenue management software products have included revenue models to be able to help manage different revenue streams such as subscriptions, usage-based billings. Some products have the ability to detect revenue leakages in different scenarios.
Most revenue management software will also help you to solve and/or manage the revenue recognition compliance, thereby reducing the risk.
For those businesses with inventory distributed across many locations, Revenue Management will help optimize the inventory. It is not just across sites but can be across multiple channels. Multi-channel inventory management (also known as multi-source inventory) is the process by which businesses account for and track orders from various sales sources on the stock that is stored at multiple locations, such as marketplaces, e-commerce, retail, and wholesale. Getting the right products at the right place and the right time is a vital part of this process.
What are the critical capabilities of Revenue Management Software?
Across the board, one would expect some common capabilities in any Revenue Management System:
· Data Visualization and Reporting
· Track pricing details for micro-level
· Revenue recognition
· Revenue models, such as recurring and transaction-based
· Promotion management
Revenue Management Capabilities relevant in Hotels/Hospitality Industry
· Dynamic Pricing
· Yield Management
· Online Reputation Analysis
· Interface with rate shopper (3rd party rate shopper)
· Competitor pricing analysis (internal Rate Shopper)
· Multi property management
· Price suggestions by channel, room and rate types
· Occupation forecasts
Revenue Management Capabilities related to the Airlines Industry
· Competitor Analysis
· Price Optimization
· Interface with Recommendation Engines
Bid Price Control
· LEG/SEG Demand Forecast & Optimization with Decision Support
· Network Optimization
Revenue Management Capabilities for the Media/Telecom Industry
· Voucher/Promotion management
· Demand volatility adjustments
· Regulatory compliance
· Channel revenue management
· Contract management
· Revenue leakage management
· Scheduling and optimizing advertising
· Partner billing management
Revenue Management Capabilities used in Pharma/Life Sciences/Healthcare/Biotech Industry
Ability to handle different classes of customers
· Chargeback Payer
· Government Pricing
· Rebate Payer
· Medicaid Payer
· Medicare Gap Payer
· Utilization Payer
Revenue Management Capabilities leveraged in Distributor Industry
- SKU management
- Channel management
- Product cannibalization
- Promotion management
- Contract management
Revenue Management Capabilities important in the B2B scenario
· Recognize revenue from various business models
· Inventory returns, billing disputes, and revenue leakage
· flexible billing and order management practices limit business growth
· revenue recognition compliance
Which are the industries that benefit from Revenue Management Software?
Practically, any industry can benefit from the revenue management capability. There are examples from B2C as well as B2B segments.
Here are some examples of industry verticals that have widely adopted revenue management:
Hotels, Landlords, Financial services, Media/Telecom, Distributors, Medical products, Airlines, Courier Services. Automotive, Banking, Insurance, Retail, Energy, and Utilities.
Revenue management will be viewed as a strategic necessity in most of the service industries. It is rapidly reaching that point in the Hotel and Car Rental industries already.
Who are the users of Revenue Management Software?
Sales, Advertising, Revenue management, as well as Marketing teams, use Revenue Management software.